As we age, managing finances can get tricky, especially when living on a fixed income. Ireland offers tax breaks like the age tax credit to help ease this burden if you are 65 and over. This credit reduces the amount of income tax you pay, allowing you to keep more of your money for important expenses like healthcare, living costs, or simply enjoying your retirement.
In this blog post, we’ll explain how the age tax credit works and cover the following key points:
- 3 Key benefits of the age tax credit for older taxpayers
- Tax exemptions available for those over 65 in Ireland
- What additional tax credits are available for older people?
- Key changes to tax credits for over 65s in Budget 2025
- How can Irish Tax Rebates help me with my tax?
- FAQs
3 Key benefits of the age tax credit for older taxpayers
If you’re 65 or older, the age tax credit in Ireland can help you lower your taxes and keep more of your income.
Here are three key benefits the age tax credit offers:
1. Lower tax bills: The age tax credit lowers the amount of tax you have to pay, making it easier to manage your finances. This extra cash can help you enjoy your retirement.
2. More money in your pocket: Whether you’re married or single, the age tax credit provides valuable tax relief no matter your relationship status. If you or your spouse are over 65, you can receive the age tax credit of €490. If you’re single or widowed, the credit is €245.
3. Easy eligibility: Qualifying for the age tax credit is simple. If you are 65 or older at any point during the tax year, you automatically qualify for the credit.
Tax exemptions available for those over 65 in Ireland
In Ireland, there are several tax exemptions available for individuals aged 65 and over, helping to reduce the financial burden during retirement.
Some of the key exemptions include:
- DIRT exemption: Deposit Interest Retention Tax (DIRT) is usually charged on interest earned from savings. But if you or your spouse are over 65 and your income is below the income exemption limit—€18,000 for single individuals or €36,000 for couples—you won’t have to pay DIRT on your savings interest.
- Marginal relief: If your income is above the exemption limit, but less than twice the exemption limit, you may qualify for marginal relief. This means you’ll only be taxed on the amount above the exemption limit, but it will be taxed at 40%, and no tax credits are applied.
What additional tax credits are available for older people?
As an older taxpayer, you may be eligible for a range of tax credits that can help reduce your overall tax. The age tax credit is just one of the tax reliefs available to older people, and it works alongside other credits to help you save.
Here are other tax credits available to older people in Ireland:
Medical expenses
As we age, medical costs may increase, but thankfully, Ireland offers tax relief on certain medical expenses. You can claim tax relief on a range of medical costs, including GP visits and prescriptions. When you’re over 65, you might find that these expenses add up, making the age tax credit even more important.
Nursing home costs
You can claim tax relief on nursing home expenses if the facility provides 24-hour nursing care. This relief applies whether you’re paying for your own care or for someone else’s. If you’re on the higher tax rate (40%), this relief applies to the expenses above the standard tax rate limit. The money you spend on nursing home care is deducted from your total income, lowering the amount of income that gets taxed.
Home carer tax credit
The home carer tax credit helps people who care for a dependent person, such as a spouse, partner, or relative, in their home. If you’re looking after someone who needs regular care due to age, illness, or disability, you may qualify for this credit. Starting in 2025, the home carer tax credit will increase to €1,950, providing even greater support for caregivers.
Not sure if you’re eligible for a rebate?
Our experts will guide you through the process, ensuring you get the maximum rebate you’re entitled to.
Key changes to tax credits for over 65s in Budget 2025
Budget 2025 introduced several changes aimed at providing more financial support, especially for people aged 65 and over.
Here’s a summary of key updates that may benefit you:
- Home carer tax credit: This will increase from €1,800 to €1,950, providing extra support for families where one partner cares for dependents at home.
- Blind tax credit: If you are blind or partially sighted due to old age, you may qualify for a tax reduction. Starting in 2025, this credit will increase from €1,650 to €1,950, giving you extra tax relief and more money in your pocket.
- Dependent relative credit: If you support a dependent relative, you could be eligible for the Dependent Relative Tax Credit. From 2025, this credit will increase from €245 to €305, offering more financial support for caring for a relative who depends on you.
- Incapacitated child tax credit: If you are the parent or guardian of a child with a permanent physical or mental disability, you can claim the Incapacitated Child Tax Credit. Starting in 2025, this credit will increase from €3,500 to €3,800, giving families additional financial support for care-related costs.
How can Irish Tax Rebates help me with my tax?
Age tax credits provide significant savings for older individuals in Ireland, reducing income tax liabilities and helping seniors retain more of their hard-earned money. These credits, including the age tax credit, home carer tax credit, and others, offer valuable financial relief, making it easier for those over 65 to manage living costs and retirement expenses.
At Irish Tax Rebates, we specialise in helping you navigate the complex process of claiming these credits. We make sure you get the most tax relief possible by handling all the paperwork and helping you claim every credit you’re eligible for. Our team provides personalised advice, tailored to your unique situation, ensuring you don’t miss out on any valuable savings or tax benefits. Speak to our team!
FAQs about age tax credit
Can age tax credits reduce your tax liability?
Yes, age tax credits can reduce your tax liability by directly lowering the amount of income tax you need to pay. The value of the credit depends on your status (single or married) and income.
Why are tax credits reduced by state pension?
Tax credits may be reduced by the state pension because it counts as taxable income, which can push you into a higher income tax bracket. As your overall income increases due to the pension, your entitlement to certain credits might decrease.
How much can pensioners earn before paying tax?
Pension contributors can earn up to €18,000 annually without paying tax if they are single, and €36,000 for married couples. Any income above these thresholds will be subject to income tax. If income exceeds the exemption limit, the person may qualify for marginal relief instead.